Location: Chattanooga, TN | Metro: Chattanooga, TN-GA MSA
Based on 1% Rule: A+ (≥1.5%) | A (≥1.2%) | B (≥1.0%) | C (≥0.8%) | D (≥0.6%) | F (<0.6%)
| Unit Size | Monthly FMR |
|---|---|
| Studio | $1,140 |
| 1 Bedroom | $1,190 |
| 2 Bedrooms | $1,290 |
| 3 Bedrooms | $1,600 |
| 4 Bedrooms | $1,700 |
| 5 Bedrooms | $1,972 |
| 6 Bedrooms | $2,209 |
| 7 Bedrooms | $2,386 |
| 8 Bedrooms | $2,505 |
Zillow median home prices vs Section 8 FMR rates (Data: 2026-07-31)
| Bedrooms | Monthly FMR | Median Price | 1% Rule | Grade |
|---|---|---|---|---|
| 2BR | $1,290 | $223,659 | 0.58% | F |
| 3BR | $1,600 | $290,656 | 0.55% | F |
| 4BR | $1,700 | $403,759 | 0.42% | F |
| 5BR | $1,972 | $533,889 | 0.37% | F |
U.S. Census Bureau data (2024)
ZIP 37416, located in Chattanooga, TN, and part of the Chattanooga, TN-GA MSA metro area, serves as an ideal cash-flow anchor within a Section 8 portfolio strategy. The Federal Market Rent (FMR) for a one-bedroom unit in FY 2024 is set at $1280, which is notably lower than the market rent of $1351. This $71 difference per month ensures that properties in this ZIP code can generate steady positive cash flow when rented through the Section 8 program.
The median home value in ZIP 37416 stands at $290,605. While this figure might seem high, it's important to note that the FMR is based on rental values, not property purchase costs. Given the spread between the FMR and the market rent, landlords can expect to maintain a reliable cash flow even with the administrative complexities associated with Section 8 tenancy.
This ZIP code also features a 39.7% renter share, indicating a significant portion of the population is already accustomed to renting, which supports the demand for rental properties. However, the primary reason to classify ZIP 37416 as a cash-flow anchor rather than a diversifier is the clear positive cash flow potential, which outweighs the benefits of diversification in this context.
The 0.3% price-cut share and N/A-day Days on Market (DOM) suggest that while there might be some negotiation on rental prices, the market remains stable. Landlords should focus on the guaranteed income stream provided by the Section 8 program, which is particularly beneficial in ZIP codes where the FMR is slightly below the market rate, ensuring a predictable and positive cash flow scenario.
To summarize, ZIP 37416 is best suited as a cash-flow anchor in a Section 8 portfolio due to the favorable spread between the FMR and market rents, despite the median home value being relatively high. The stability and predictability offered by the Section 8 program in this area provide a solid foundation for generating consistent income, making it a valuable addition to any investment strategy focused on long-term, low-risk returns.
Data Sources: FMR data from HUD (2027). Median home prices from Zillow (2026-07-31). Demographics from U.S. Census (2024).
About FMR: Fair Market Rent (FMR) is used to determine payment standards for the Section 8 Housing Choice Voucher program, initial renewal rents for some expiring project-based Section 8 contracts, and rent ceilings for HOME Investment Partnerships.